Answer :
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1. Municipal bonds typically pay lower interest rates than other government bonds because they are often tax-free. This tax advantage makes them attractive to investors in higher tax brackets, which leads to lower interest rates compared to other government bonds.
2. Municipal bonds are issued by local governments, such as cities or counties, to fund public projects like schools, hospitals, or infrastructure. These bonds are considered lower risk investments due to the stability of local governments' ability to generate revenue through taxes to repay bondholders.
In summary, municipal bonds pay lower interest rates because they are often tax-free and are perceived as lower risk investments due to the backing of local governments.
